Tan Chong Financial Results

(HK$'million)

For The Six Months Ended 30 June

Year

2018

2017

2016

Revenue

7,779

8,026

8,857

Operating Profit

556

553

344

Profit attributable to equity shareholders

347

330

119

Earnings per share (cents)

17.0

16.0

5.9

Dividend per share (cents)

2.5

2.5

2.0

The first six months of 2018 was challenging. During the period, revenue and vehicle sale units declined by 3% and 10% respectively. Although the Group’s transportation logistics operations by ZERO CO. LTD in Japan (“Zero”) registered revenue increase, there was a profit decrease in its operations.

The Group has been and is working towards a leaner, more agile and competitive organization. It conducts continuous review across all areas that have both material long and short-term values to the Group. The Group is committed to reduce cost while improving productivity at all levels of the organization with the view to continually eliminate Non Value Added Activities. These actions have discerning improvements to the company's financial positions in the current period, as they did in the past, thus ensuring our long-term competitiveness and sustainability.

Construction of the Group’s Subaru production plant located in Thailand is progressing satisfactorily. When completed, it will strategically cater to the growing Asean CKD markets. This positions the Group for positive and competitive growth in the long term.

The Group's revenue in the first 6 months of 2018 was HK$7.78 billion; a 3% decrease as compared to HK$8.03 billion for the first half of 2017. Despite the revenue drop, EBITDA and Profit registered satisfactory levels of HK$699 million and HK$399 million respectively, due largely to improvement in operating profit margin of 7.2% when compared to 6.9% achieved in the first half of 2017. These positive results are attributable to the reduction in distribution costs and other operating expenses.

Revenue and vehicle/industrial machinery sales for the period reached HK$7.78 billion and 14,860 units respectively as compared to HK$8.03 billion and 16,435 units for the corresponding period of 2017.

EBITDA of HK$699 million registered an increase of 3%, whilst Profit for the period of HK$399 million registered a decrease of 3% when compared to the first half of 2017.

The Group's net gearing ratio, computed by dividing the net debt with the total equity was 1.4% as compared to 4.5% for the period ending 31st December 2017.

ROCE, computed by dividing earnings before interest and taxes (EBIT) with total equity plus non-current liabilities, reduced to 4.0% for the period ending June 2018 as compared to 4.3% at the end of the first six months of 2017.

Net Asset Per Share at 30 June 2018 was HK$6.33, an increase from the HK$6.32 as recorded at the end of December 2017. The directors have declared an interim dividend of HK$0.025 per share for the half year of 2018.